‘Extremely Disappointed’: Providence Denies State AG’s Claims After Lawsuit

Charity Care, Collections at Center of Allegations Against 14 Hospitals


The state attorney general’s office has filed a consumer protection lawsuit against five Swedish hospitals and nine Providence-affiliated facilities — including its Centralia and Olympia locations — for allegedly failing to ensure that eligible low-income Washingtonians received the discounts to which they were legally entitled. The attorney general also accuses the hospitals of aggressively collecting money from charity care-eligible, low-income residents.

Attorney General Bob Ferguson’s office announced the lawsuit on Thursday.

Providence responded with a statement denying the claims.

“The Providence family of organizations is extremely disappointed that the Office of the Washington State Attorney General has chosen to file inaccurate and unfair charges against us regarding our charity care and financial assistance practices,” Providence wrote in the statement. “Serving every person who comes to us, regardless of ability to pay, is a central tenet of our mission as a not-for-profit organization. We take this responsibility seriously.”

Ferguson said he would file a motion for preliminary injunction unless the hospitals agree to stop the alleged conduct while the case is ongoing.

Ferguson’s lawsuit asserts that Providence Health & Services Washington, Swedish Health Services and Kadlec developed and encouraged a corporate culture that prioritizes collection over charity care, aggressively attempting to collect payment at the time of treatment and continuing to collect post-treatment even when the hospitals know that a patient is eligible for financial assistance.

All 14 of the hospitals included in the lawsuit operate under the national nonprofit health system Providence St. Joseph Health, which is based in King County.

The Attorney General’s Office claims the hospitals train employees to ask for payment in a way that implies that payment is expected, while obscuring a patient’s right to apply for charity care.

Providence Washington’s non-profit locations include one location each in Centralia, Olympia, Chewelah, Colville, Walla Walla and Everett, as well as two locations in Spokane.

Non-profit Swedish Health Services operates two hospitals in Seattle, as well as facilities in Ballard, Issaquah and Edmonds.

Kadlec is located in Richland.

In their communities, many of the hospitals are either the largest, or the only hospital in their area, according to the news release. Swedish’s location at First Hill is the largest hospital in the state with over 800 beds.

Together, these hospitals reported more than $18 billion in patient service revenues in 2020, according to the news release.

Ferguson’s lawsuit, filed in King County Superior Court, asserts that these hospitals committed thousands of Consumer Protection Act violations, including:

• Training employees to aggressively collect payment without regard for a patient’s eligibility for financial assistance, instructing them to use a specific script when communicating with patients that gives patients the impression that they are expected to pay for their care;

• Failing to notify patients they were eligible for charity care financial assistance when the providers determined they qualified for assistance;

• Sending more than 54,000 patient accounts to debt collection, despite knowing the patients were eligible for financial assistance. These 54,000 patient accounts totaled more than $70 million. Under Washington’s current charity care law, those patients were eligible for discounts on their bills. Moreover, under its own charity care policies that Providence promoted, these patients should have been eligible for full write-offs of their medical debt.

The conduct began in 2018, according to the news release. Much of the conduct continues to this day, the lawsuit asserts, despite the Attorney General’s Office investigation and previous lawsuits Ferguson has filed against other hospitals over similar practices.

This is the third major lawsuit Ferguson has filed related to charity care. Ferguson launched the investigation after receiving complaints about Swedish’s charity care practices.

“Charity care helps low-income families avoid crushing medical debt by making financial assistance available to those who qualify,” Ferguson said. “Hospitals cannot deceive Washingtonians about their legal right to access medical financial assistance. They must follow the law, and ensure low-income patients have access to the resources they need.”

The lawsuit seeks restitution in the form of full writeoff of medical debts, and refunds, plus interest, for patients who did not receive financial assistance. In addition to the $70 million in debt relief and refunds, Ferguson is also seeking millions of dollars in civil penalties.

As the largest provider of charity care in Washington, Providence noted its organizations delivered $79 million in free and discounted care statewide in 2020.

“Our practices comply with, and in many instances exceed, the requirements of Washington’s Charity Care Act,” Providence wrote in its statement. “In fact, our threshold for charity care eligibility is at least two times more generous than Washington state standards. When the AG’s office first raised their concerns with us two years ago, we cooperated fully and in good faith. That is why it is inconceivable that the AG has chosen now to file this complaint, which runs counter to the facts we provided to his office.”